Atome completes Paraguay free trade zone agreement

15th Aug 2024 11:21

(Sharecast News) - Green fertiliser project developer Atome announced the completion of a formal free trade zone (FTZ) contract for its flagship 145 MW Villeta project in Paraguay on Thursday.

The AIM-traded firm said the milestone followed the signing of a presidential decree on 14 November 2023, which authorised the grant of FTZ status to the project, marking it as the seventh FTZ granted by Paraguay.

It said the FTZ designation would provide significant tax benefits to the Villeta project, including exemptions from municipal, VAT, and corporate taxes.

The benefits were expected to enhance the economic efficiency of the project.

Atome said the FTZ status complemented the recent heads of terms agreement with Yara International, which would secure the long-term offtake of Villeta's entire production, further strengthening the project's commercial viability.

Key terms of the FTZ contract included a 30-year term with legal and financial certainty for the duration of the project.

The FTZ status started on 1 August, and offered a number of tax exemptions, including exemption from VAT on sales of goods and services within Paraguay, import of equipment and services, and services provided to the FTZ.

A 0.5% FTZ tax on revenue from export sales to third countries would apply, with no corporate income tax (CIT).

It also granted a 3% effective CIT on profits derived from sales within Paraguay, as well as exemptions from CIT and withholding taxes on remittance of profits or dividends to third countries, and on payments for services, including financing, provided from third-party countries to FTZ users.

The board said the provisions were designed to provide Atome with substantial financial advantages, positioning the Villeta project as a robust and economically-efficient green fertiliser production facility.

"The completion of the free trade zone contract is another milestone achievement, coming quickly after the signing of the heads of terms with Yara for offtake of our future Villeta production," said Atome Paraguay president James Spalding.

"We are deeply appreciative of the ongoing support for our flagship project by the government and regulatory authorities of Paraguay and would like to reiterate our congratulations to the country for achieving investment grade status from Moody's Ratings.

"We look forward to continuing to deliver this project for the company and Paraguay."

At 1146 BST, shares in Atome were up 11.39% at 88p.

Reporting by Josh White for Sharecast.com.